The Bahamas May Be Losing Its Status as a Premier Offshore Financial CenterOffshore Account Update
Posted on June 29, 2018 | Share
Across the globe, there are certain locations that have favorable banking, finance, and tax laws. Historically, many investors have put their money into financial institutions in these locations. There are a wide variety of motivations for investing in these different jurisdictions, but one of the reasons why people have put their money into these offshore locales is to hide their funds from taxing authorities.
Unfortunately, because investing in foreign financial institutions has come to be associated with tax evasion, countries and governing bodies have been taking steps to crack down on offshore investments. These steps range from threatening to prosecute Swiss banks unless they paid fines and provided accountholder information to the IRS or other tax authorities to blacklisting countries who didn't comply with rules aimed at fighting tax evasion.
These efforts to crack down on offshore investors have had serious consequences, and those with money invested in foreign financial institutions should talk with a New Jersey tax attorney as soon as possible for help exploring legal options. Fines and penalties could result if the IRS discovers offshore investments, and taking swift action to protect yourself is important.
It is not just individual investors who are facing problems because of this crackdown on tax evasion either. The banking industries in countries that have traditionally been favored by offshore investors are suffering. This is particularly true within the Bahamas, and the Tribune recently published an article about the issues that the Bahamas is facing.
The Bahamas May No Longer Be an Offshore Financial Destination
The Bahamas is experiencing serious problems because of the global crackdown on tax evasion since it has been blacklisted due to its financial and tax policies. The government of the Bahamas is reportedly trying to work with the OECD, or the Organization for Economic Cooperation and Development, to get off of this blacklist. However, the demands that the OECD has may fundamentally reshape financial regulations in the Bahamas if the country accedes to the OECD's requirements.
To get off the blacklist, foreign financial institutions in the Bahamas would need to disclose the names of principal owners of offshore structures and would need to alter certain corporate income tax rules. These are major changes and, as the Tribune rights, there would be a big shift in how the financial institutes in the Bahamas operate if these changes were put into place.
This is a major issue for the Bahamas because, whether it makes the chances or not, it is likely to no longer be a destination as a financial center. Either the blacklisting or any legal changes could make it impractical for foreign investors to continue putting their money into financial institutions in the Bahamas, and this will impact the local economy. Because the Bahamas was a popular place to invest, banks located there and provided jobs. If it is no longer a financial destination, the economy will become even more dependent on tourism.
Investors will also need to be aware that changes in the Bahamas may mean their money is no longer safe there. Kevin Thorn, a New Jersey tax attorney, can provide insight into how crackdowns on foreign financial institutions will affect investors.